Officials here says the US crude supply will help India to keep oil prices low and stable to benefit consumers
In a significant development, India on Monday received the first shipment of 1.6 million barrels of American crude oil at Odisha's Paradip Port. With this, India joined South Korea, Japan and China to buy American crude and to lessen dependence on supplies from the Gulf and Organisation of the Petroleum Exporting Countries (OPEC). A sample of the crude was symbolically presented to Sanjay Sudhir, Joint Secretary (International Cooperation) in the Ministry of Petroleum & Natural Gas and Katherine B Hadda, US Consul General in Hyderabad. Senior Officials from the Ministry of External Affairs and Indian Oil were also present at the port. Officials here said the US crude supply will help India to keep oil prices low and stable to benefit consumers.
The 40-year-old ban on export of American oil was lifted by the then US President Barack Obama in December 2015. But the real shift began during the maiden meeting between Prime Minister Narendra Modi and US President Donald Trump on June 26, 2017, when the two leaders agreed to deepen engagement in the energy sector. Thereafter, two Indian giants placed orders for over four million barrels.
Indian companies have also contracted nine MMTPA of LNG from the US and the first shipment is expected in January 2018. Of this, GAIL has contracted 5.8 MMT per annum, including 3.5 MMTPA of LNG from Sabine Pass Liquefaction terminal (Louisiana) and 2.3 MMTPA from Cove Point LNG liquefaction project (Maryland).
The move will give India's Oil Minister Dharmendra Pradhan more leverage seeking a discount from the OPEC. At the last Istanbul meeting, he had asked the OPEC nations to give a discount to India by virtue of being a large and loyal customer. The OPEC, meets about 86 per cent of the nation's oil needs. With the US emerging as an exporter of crude oil, producers in the Middle East will have to maintain a competitive pricing strategy.
Calling it as a new chapter in the history of Indo-US trade, particularly in the oil and gas sector, Sanjay Sudhir said that the inclusion of the US as a source for crude oil imports by India's largest refiner will go a long way in mitigating the risks arising out of geopolitical disruptions. He hoped that the new arrangement would also usher in price stability and energy security for India, which is witnessing robust growth in demand for petroleum products.
Earlier the MT New Prosperity, a Very Large Crude Carrier (VLCC), of capacity 2 million barrels of crude, arrived at Paradip port. Indian Oil which became the first Indian public sector refiner from India to source US crude has placed a cumulative order of 3.9 million barrels from the US. Bharat Petroleum and Hindustan Petroleum, India's two other public sector refiners have also placed orders for about 2.95 million barrels and 1 million barrel respectively for their Kochi and Vizag refineries. The total volume of the crude presently contracted by Indian public sector refineries is, therefore, 7.85 million barrels. The three refiners are sourcing sweet, sour and heavy crudes for their refineries which are equipped to handle a complex mix of crude oils. Indian companies, both public and private, have made sizeable investments in US Shale assets with a total investment of approximate US $ 5 billion.
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